Keeping it Short: FCA Consults on Implementation of Streamlined UK Short Selling Regime

On 28 October 2025, the Financial Conduct Authority (FCA) published a consultation paper (CP25/29) proposing significant changes to the UK’s short selling regulatory framework. CP25/29 seeks to introduce a new Short Selling Sourcebook within the FCA Handbook, replacing the current regime under the EU-derived UK Short Selling Regulation (UK SSR).

The proposals follow HM Treasury’s (HMT) Short Selling Regulations 2025 (SSR 2025), which established the legislative framework for the FCA’s new rules and broadly replicated existing short selling emergency powers, while making key structural changes to the regime.

Background

The UK SSR sets out short selling requirements for financial instruments admitted to trading on UK trading venues, including shares, UK sovereign debt, and credit default swaps. Following HMT consultations in 2022-23, the UK Government concluded that, while it was not necessary to fundamentally change the current regime, the UK SSR should be modified to alleviate disproportionate burdens that may be inhibiting legitimate short selling activity.

The SSR 2025, published in January 2025, establishes the new short selling framework under the Designated Activities Regime (DAR), which provides the FCA with regulatory powers over non-FCA authorised entities that carry out certain designated activities, including short selling. 

Key Proposals

The FCA proposes targeted adjustments that seek to maintain the core regime while reducing operational burdens and enhancing clarity.

1. Position Reporting

The deadline for notifying changes in net short positions (NSPs) will be extended from 15:30 to 23:59 (UK time) on T+1, providing additional time for position holders to comply with notification requirements. Additional guidance clarifies NSP calculations, including sources for determining issued share capital, timing requirements, and group reporting mechanics to avoid double counting.

2. Covering Requirements

Firms engaged in short selling will be required to retain records demonstrating appropriate covering arrangements for a minimum of five years. The FCA clarifies how subscription rights and easy-to-borrow confirmations fit within covering expectations, providing greater certainty for market participants. 

3. Reportable Shares List

Replacing the current list of exempt shares, the FCA will publish a reportable shares list (RSL) of admitted shares to which its rules apply. The FCA proposes more pragmatic criteria for inclusion of shares in the RSL, focusing on principal country of trading, “significant importance” to UK markets, and - where relevant - alignment with similar third-country rules to avoid duplication. This should reduce the overall number of shares on the RSL. In addition, the date on which the RSL is updated every two years would now shift from 1 January to 1 April to align with the publication of the EU’s list under the EU Short Selling Regulation.

4. Market Maker Exemptions

Notification periods will be reduced from 30 to 15 calendar days for new market makers, while existing exempt market makers can notify new instruments with immediate effect (subject to transitional arrangements). Content requirements will also be simplified, with membership of a single UK or eligible EEA trading venue remaining sufficient.

5. Public Disclosure

As required by SSR 2025, the FCA will publish aggregate net short positions (ANSPs) by issuer, replacing the current 0.5% named disclosure regime. Individual position holders will be anonymised. Given the extended reporting deadline, ANSPs will be published from 12:00 (UK time) on T+2 with both current and historic data available. 

Implementation Timeline

The regime will be implemented in two phases:

• Phase 1 (main commencement day): New Short Selling Sourcebook, ANSP calculations, and RSL publication.
• Phase 2 (six months later): Updated operational systems for position reporting and market maker notifications.

Next Steps

The consultation period for CP25/29 runs to 16 December 2025. Following this, the FCA will publish its Policy Statement two months before implementation, accompanied by a live draft RSL for systems integration. 

CP25/29 is available here. 

For more information on HMT’s Draft Short Selling Regulations 2024 that preceded CP25/29, see here.